Chemicals Update—Navigating Uncertainty in 2025: Shipowners Find Opportunity in Trade Turmoil

The first half of the 2020s has brought relentless disruption to global trade, with COVID and global lockdowns, Russia’s invasion of Ukraine, armed conflicts in the Middle East and attacks on key shipping routes, the tariff battles, particularly between China, the US, and the EU. Each year has been adding instability to the world order, and consequently – reshaping the trade routes. Meanwhile, expansion of manufacturing and port capacity in China has shifted global power balances. All of this has unfolded alongside the EU’s sustainability drive and new IMO regulations, which have put mounting pressure on the shipping sector to decarbonize. Certainly, it is not the easiest time to do business and navigate the winds of change.

As the first half of 2025 came to an end, major shipowners have released their Q2 performance results. Have they managed to profit amid the ongoing headwinds? As the saying goes, the numbers speak for themselves. In a nutshell, shipowners have reported improved results in Q2 2025 compared to Q1, although lower than Q2 2024 figures. Notably, none of these companies posted negative financial results—unlike many in the petrochemical sector.

Uncertainty over tariffs and stabilised trade patterns depressed overall sentiment

In 2025 so far, owners have been navigating through fog due to the implementation of new or increased tariffs—and reciprocal measures—between major trading partners such as the United States, China, the European Union, Mexico, and South Korea. This development has cooled the market, leading to a decline in rates, as many charterers adopted a wait-and-see approach in an effort to avoid—or at least minimise—the risks associated with the outcome of these tariffs. Some shipowners, however, managed to increase their spot volumes and improved their results by adding vessels on short-term time charters.

Many shipping companies are still re-routing their vessels away from the Red Sea, affecting trading patterns, freight rates, and operating expenses. Although attacks on ships generally decreased in the first half of 2025, the situation remained volatile, and some owners have stated that their strategy to avoid transits through the Red Sea would remain in place. Notably, the previous year’s results were supported by the need to re-route due to the draught and resulting huge congestion at the Panama Canal—an effect that was not repeated in Q2 2025. Nonetheless, many owners have pointed out that bunker fuel prices were lower in Q2, providing some relief to operating costs and helping to stabilise financial performance.

In contrast, some product tanker operators have reported strong demand, driven by low global inventories, improving refining margins, and high export volumes—all of which gradually supported Q2 results and have continued into Q3. Despite refinery closures, exports from the Americas remained robust. Nevertheless, the market continued to be affected by the complexity of volatile geopolitical developments and the expansion of vessel sanctions. While product tanker tonne-miles began to rebound in March 2025, trade volumes on routes most affected by the Red Sea disruption remained subdued—effectively offsetting earlier tonne-mile gains driven by longer re-routing. Although the situation in the Red Sea remained unresolved in H1 2025, trade patterns and supply chains for refined petroleum products were adjusted, and the spike in daily spot TCE rates caused by the initial disruption eventually normalised, leading to a reduction in TCEs.

Owners ready for H2 2025 volatility and growth in tonne-miles

The market remains in a transition period, and uncertainty surrounding the future development of tariffs continues to weigh on sentiment and charterers’ behaviour, tempering confidence across segments. Overall, market fundamentals in the chemical tanker segment are expected to remain unchanged for the remainder of 2025, although firming rates in adjacent markets may provide some support in the latter part of the year. Some owners have already reported positive shifts in chemical tanker TCEs in Q3 compared to Q2. However, the earnings outlook for the rest of the year remains broadly in line with H1 2025 performance.

Tanker markets will continue to be influenced by geopolitical risks. While the outcome of escalating tensions in conflict zones is difficult to predict, longer voyages—taken to avoid high-risk areas—may still have a positive impact on tonne-miles. The ongoing closure of refineries in Europe and the United States is expected to further tighten diesel and jet fuel supplies, with replacement cargoes likely to be sourced from the Middle East Gulf—adding to product tonne-miles. Additionally, the product tanker market is anticipated to benefit from increased CPP export volumes from Chinese refineries.

As the saying goes, every cloud has a silver lining. In the current global trade landscape, that silver lining may well be found in shifting trade patterns and longer voyages. With refining and petrochemical capacity increasingly concentrated in the East, and closures continuing in the West, tonne-mile growth is being driven by a structural move toward long-haul trade flows. At the same time, ongoing re-routing around high-risk areas such as the Red Sea is extending voyage distances, supporting tonne-mile demand—even as overall trade volumes remain relatively subdued.

Amid ongoing geopolitical tensions and tariff-related uncertainty, many owners are adjusting their operational strategies to navigate this volatile environment. In a market where clarity is scarce, adaptability has become a competitive edge—and for some, longer routes and shifting flows may prove to be the unexpected upside in an otherwise challenging year.

 

By Svitlana Synoha, Market Analyst, Chemicals, SSY.